State Rundown 4/12: Season in Transition as Some States Close, Others Open Tax Debates

This week in state tax news we see Louisiana‘s session getting started, budgets passed in NewYork and WestVirginia, Kansas lawmakers taking a rest after defeating a harmful flat tax proposal, and Nebraska legislators preparing for full debate on major tax cuts. Nevada lawmakers may make tax decisions related to tampons, diapers, marijuana, and property before closing their session this week. And gas tax update efforts are gaining steam in Alabama, SouthCarolina, and Tennessee.

Legislators in NewYork and WestVirginia passed budgets last weekend. The budget agreement in New York includes a two-year extension of the state’s surcharge on millionaires. It also includes an overhaul of the state’s workers’ compensation program and a plan to waive state college tuition for many middle-class families. By contrast, the West Virginia legislature passed a budget last weekend that includes heavy spending cuts and no tax increases. The agreement, now under consideration by Gov. Jim Justice, draws $90 million from the state’s rainy day fund and cuts the medical services line item in Medicaid, higher education, regional education service agencies, and WV public broadcasting. It also lacks any teacher pay increases.

Alabama appears poised to update its gas tax with a 4-cent increase this year, another 2-cent increase in 2019, and an optional increase of 3 cents in 2024. The revenue would be split between state infrastructure bond payments and city and county roads needs. The bill advanced through a House committee this week and has broad support.

SouthCarolina‘s gas tax debate is set to recommence in earnest when legislators return from recess next week, though the outcome remains uncertain. Gov. Henry McMaster has vowed to veto any gas tax increase, leading some lawmakers in the Senate to attempt to add an income tax cut to the bill to attain a veto-proof majority, while others are hoping to fill the state’s $1 billion annual transportation funding gap by building and taxing new casinos.

An op-ed penned by New Jersey Policy Perspective makes a good case for a change of approach to New Jersey‘s fiscal issues, arguing that “Instead of the annual ritual of scores of groups with important needs fighting for tiny scraps of an ever-shrinking pie of funding, New Jersey needs to take a serious look at making that pie larger.” The op-ed offers a few excellent suggestions for how to accomplish this goal.

A new report by the Keystone Research Center (KRC) provides estimates of the impact of property tax elimination proposals. The analysis shows that eliminating Pennsylvania‘s school property taxes would increase taxes on the middle class while hampering the state’s ability to adequately fund public schools.

The Louisiana Budget Project has just released an analysis of Gov. John Bel Edward’s tax plan—a plan that suggests adopting a Commercial Activities Tax and significant changes to the personal and corporate income taxes that would require both legislative and voter approval. If all components of the tax reform package were to be enacted, collectively these reforms would be a move toward a more adequate tax system for the state.

The Georgia Budget and Policy Institute takes a look back at this year’s session, noting the state avoided some harmful regressive tax cuts but also passed a number of smaller changes that add up to a significant reduction in revenue for state services.

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